Harford County housing market faces a 'new normal' of low growth

Aegis, The (Bel Air, MD), 2014-07-16


July 16 --Despite signs and talk nationally of a slow recovery in housing construction, Harford County is experiencing one of its slowest years since the nationwide slump began six years ago.

According to figures released by the Harford County Department of Planning and Zoning at the end of June, permits to build 82 single family houses were issued in the first six months of this year, compared with 112 for the same period a year earlier. The county issued 92 permits for new townhouses in the first six months of both years and has not issued a permit for an apartment unit, condominium or rental, since 2012.

"It's running a little lower than it has been," county Planning and Zoning Director Pete Gutwald said Monday.

The county has issued more building permits overall for residential construction in the first six months of 2014, but fewer for new construction compared to the same period for the past two years, according to a permit activity report provided by Gutwald.

The county has issued 657 residential permits as of June 30 , compared to 449 for the same period in 2013 and 625 in the first six months of 2012.

Only 174 permits were issued for new housing units, however, compared to 209 in 2013 and 279 in 2012.

Gutwald noted more county residents appear to be "staying in place" and building additions to their existing homes, rather than buying new houses.

He pointed out figures in the report that showed 313 permits have been issued for additions to single-family homes for the first half of 2014.

That figure has more than doubled from 2013, when 108 permits were issued for additions during the same period; 184 permits were issued for additions during the first half of 2012.

The 'new normal'

Gutwald said the county has been issuing about 500 to 700 residential building permits each year since the housing market crash of 2007 and 2008, a significant drop from the average of 1,500 to 2,000 permits per year during the housing boom of the 1990s and early 2000s.

"I always call it 'the new normal,' " Gutwald explained.

He added: "I think it will be a while before we go back to the days when we were issuing 1,500 to 2,000 permits per year."

The "new normal" is also in effect for home builders.

Bill Minton is president of Jarrettsville Builders , a family-run firm based in Forest Hill that has been in business in Harford County since 1950 and specializes in commercial projects and custom-built single-family homes.

Minton noted Tuesday the majority of the company's projects have been commercial since the economic downturn.

He said the market for custom homes built by his company is limited to "specific areas" of the state such as Howard County and the Washington, D.C. , suburbs.

"I would say just from my perspective the residential housing market -- from the perspective of custom building -- is still nothing at all like what we are accustomed to," Minton said.

He said a lack of confidence in the national economy, with an extra layer of increased regulation for home builders, means less residential building in Harford County .

"There is no question it is just a different place and time that I believe is the new norm and not a transition back to something that once was," he said. "We all recognize that this is what we deal with today, and you have to just accept it or move onto something else."

Minton stressed that he sees the good intentions behind state regulations requiring greater stormwater management and septic facilities on residential sites to protect waterways, plus building codes that require the installation of home sprinkler systems to extinguish fires.

He noted that the strengthened regulations add an average of $30,000 to $40,000 to the cost of building a custom house, depending on the lot, which is passed on to the consumer.

"We either definitely make some adjustments in our business model, or we won't stay in business," Minton said.

Municipal building

The county-issued permits do not cover building activity inside the municipalities of Aberdeen , Bel Air and Havre de Grace , which control their own permitting processes.

Of the three, Havre de Grace has seen the most activity during the housing construction slump. Bel Air has stopped issuing permits for most new construction because of water supply concerns.

Havre de Grace city officials, who are wrestling with a mounting water and sewer fund deficit, still aren't happy with the level of new construction in their town, which hasn't approached the numbers they say they need to get out of the current financial morass.

As Havre de Grace city officials continue to wrestle with the city's mounting water and sewer deficit, the new construction activity they had been counting on to help bail them out of the financial mess remains elusive.

City Planning Director Neal Mills told the city council during its most recent meeting on July 7 that new construction remains slow compared to previous years.

Mills said 169 permits were approved for single family homes in 2010, although that was the end of the final extension of a tax credit for first-time home buyers.

In 2011, the city dropped to issuing 65 new home permits. It then issued 87 permits in 2012, 36 in 2013 and 45 in 2014. Greenway Farms , for one, had 12 building permits issued in 2012, six in 2013 and none in 2014, he said. All 45 permits for the last fiscal year were in Bulle Rock.

"I believe we are doing everything we can," Councilman Bill Martin said. "We are not complacent."

Development in the Town of Bel Air has been curtailed since the county health department and the Maryland Department of the Environment imposed a moratorium on any new projects that increase demand on the municipal water supply.

The town issued one residential building permit during the first half of 2014, compared to nine permits for single-family homes in all of 2013 and two permits during all of 2012, according to Clarissa Mullaney , building permits clerk for the town's Department of Public Works .

Aegis staff writer Bryna Zumer contributed to this article.

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